Purchase of Parks Sausage is final State guarantee of loan seals deal after one-month delay

September 11, 1996|By Sean Somerville | Sean Somerville,SUN STAFF

It's official. Finally.

Franco Harris yesterday became the owner of Parks Sausage Co., the struggling Baltimore company that temporarily closed its doors in May and sent home more than 100 employees.

The former football star settled a deal with the previous owners, Raymond V. Haysbert and his son, Reginald, to pay $1.7 million for the company and assume $3.9 million of its debt.

The last piece fell into place Monday with the completion of the state's agreement to guarantee $1 million of a $4.5 million loan from an Ohio bank. Parks LLC, Harris' company, took ownership of the 45-year-old Baltimore company yesterday.

"Excited and scared is the only way I can explain my feelings," Harris said. "I've never owned so much debt before in my life. And I've never had responsibility for as many people in my life either."

Raymond Haysbert, a 44-year veteran of Parks who has tried to sell the company for more than a year, said he was relieved. "My office is half-packed," he said. "My trophies are off the wall. And I'm getting ready to go."

The deal to sell Parks was approved in July by U.S. Bankruptcy Judge James F. Schneider after the company filed for Chapter 11 bankruptcy protection.

The agreement called for the deal to be made final by Aug. 5. The date was moved back twice before lawyers finished work on the deal yesterday.

The sale requires three major creditors to forgive more than half of $8.2 million in secured debt owed by Parks, leaving Harris with $3.9 million in debt. Nations Bank will forgive $2.4 million of a $5.4 million loan. Baltimore Development Corp., the city's economic development agency, has converted a $450,000 past-due debt to a 10-year, $400,000 loan. And the city will take $500,000 over 10 years to satisfy a $2.4 million obligation.

The $1.7 million sale price will pay for property taxes, bankruptcy fees and the company's pension fund in full. The amount that's left, plus proceeds from the sale of a company building in New Jersey, will go to 500 holders of $2.4 million in unsecured debt. In the deal, the Haysberts will act as paid consultants and get a 6 percent stake in Parks Sausage.

The administration of Mayor Kurt L. Schmoke had said that the city should do everything in its power to keep Parks in Baltimore as an "African American-owned" company -- a status it retains with Harris and his partner, Lydell Mitchell, a former Baltimore Colt who played football with Harris at Penn State University.

"Now the challenge is to make it work," said City Housing Commissioner Daniel P. Henson III, whose office administered a federal loan that helped Parks build its new plant in Park Heights.

The Maryland Industrial Development Financing Authority will insure $1 million of a $4.5 million loan from Banc One, which is headquartered in Columbus, Ohio.

In a statement, Gov. Parris N. Glendening said he was pleased that "we are able to save family-supporting jobs for this historic Baltimore company." Parks workers earn about $10 an hour.

Harris is the majority owner of Super Bakery Inc. in Pittsburgh, a company that markets vitamin-packed doughnuts and other products to schools and other institutions.

Harris has been running Parks since late June as part of a court-approved interim plan aimed at preserving the company's assets. Before the May 24 shutdown, the company employed 220 people -- about 130 in Baltimore and the remainder LTC throughout cities in the Northeast corridor.

So far, Harris has called back 85 of the Baltimore workers. Harris and Mitchell said the company would call back more employees as business grew. But they did not have a specific schedule.

None of the roughly 80 workers responsible for sales and distribution in Pennsylvania, New Jersey, New York and Connecticut will be called back. Parks will use independent food brokers and distributors to do their jobs.

It was throughout the northeast corridor that Parks became well-known through a radio advertising campaign launched in 1955 that used the slogan, "More Parks Sausages Mom, Please."

Since Parks reopened, the company has recaptured business in the New York retail market. "Right now, we're trying to add to our Baltimore-Washington market and we're trying to expand down to Richmond," Mitchell said.

Harris said he has been impressed that the Parks name was well-known not only in the Northeast, but as far south as Florida and as far west as Chicago. "I was looking at it being a very limited geographic area," he said. "But it is a lot more widespread than I had anticipated."

Founded in an abandoned dairy plant in 1951 by Henry G. Parks Jr., the company in 1967 built a 30,000-square-foot plant near Camden Yards. Two years later, the company went public.

The offering marked the first time a company founded by an African-American had been publicly traded, according to Parks. It has since become a privately held company.